i Mm Project 129

8/6/2019 i Mm Project 129

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CROSS-COUNTRY ANALYSIS OF

AMWAY’S INTERNATIONAL

MARKETING STRATEGY

PROJECT REPORT FOR COURSE ON

INTERNATIONAL MARKETING

MANAGEMENT

SUBMITTED TO PROF. R.M. JOSHI

SUBMITTED BY MOHONA DEY, 129



BACKGROUND

Amway is the largest direct selling company and manufacturer in the world that uses

network marketing to sell a variety of products, primarily in the health, beauty, and homecare markets

.Amway was founded in 1959 by Jay Van Andel and Richard DeVos. Based in

Ada, Michigan, the company and family of companies under Alticor reported sales growth of

2.3%, reaching US$8.4 billion for the year ending December 31, 2009. Its product lines

include home care products, personal care products, jewellery, electronics, Nutrilite dietary

supplements, water purifiers, air purifiers, insurance and cosmetics. Amway conducts

business through a number of affiliated companies in more than ninety countries and

territories around the world.

Multi-level marketing (MLM) is a marketing strategy in which the sales force iscompensated not only for sales they personally generate, but also for the sales of others

they recruit, creating a down-line of distributors and a hierarchy of multiple levels of

compensation. Other terms for MLM include network marketing, direct selling, and referral

marketing.

Amway combines direct selling with a network marketing strategy. Independent Business

Owners (IBOs) may both market the products directly to potential customers and also

recruit (sponsor) and train other people who become IBOs themselves and in turn have the

same opportunity. Each IBO may earn income both from the retail markup on any products

they sell personally, plus a performance bonus based on the sales volume they and their

down-line have generated. People may also register as IBOs to buy products at a discounted

rate.



PROBLEMATIC SITUATION

Changes in the business environment create both opportunities and threats to an

organisation's strategic development, and the organisation cannot risk remaining static. It

must monitor its environment continually in order to:

build the business

develop strategic capabilities that move the organisation forward

improve the ways in which it creates products and develops new and existing

markets with a view to offering its customers better service.

The process of strategic analysis helps an organisation to understand more about its

strategic position and to construct answers to questions such as:

What is happening to our business environment?

What do we need to know about our markets and customers?

What new options should we consider?

How can we develop our competencies to meet all the changes in the business

environment?

By asking these questions, a business looks to match its own objectives for growth and

development with the reality of the business environment.

Amway is an interesting example of a company that reviews its strategic capabilities and

uses this review to develop its products and markets.

As an international company operating in 80 markets, Amway adapts its business model to

the cultural and economic needs and standards of the markets in which it operates; their

business model varies slightly from market to market owing to the unique problems faced in

each new market.

For the purpose of this project, the pitfalls faced and strategies adopted in the following

markets will be studied – the parent country USA, Australia, Europe, India, China and Japan.

Special emphasis will be given to Amway’s operations in China as it faced a host of different

problems in the country.



AMWAY IN USA

The Business Environment - Amway's history represents a recent chapter in the long history

of direct selling, which began in America's colonial period with unorganized Yankee peddlers

selling tools and other items door to door. By the 1800s, direct selling decreased with the

advent of mass merchandising, such as department stores and mail-order sales. In the later

19th century and early 20th century, however, some manufacturers found direct sales had

advantages over the sales of their products in large stores. They preferred the personal

touch, with salesmen making home demonstrations of their products exclusively. By the

1920s door-to-door salesmen were marketing brushes, cooking utensils, and other

products. Retail stores fought back with local laws on peddlers. The federal government's

regulations of company-employee relations led to the independent contractor solution. As

independent contractors, salesmen were no longer employees: they were independent

businessmen who bought products for resale. The first network marketing began in 1941

when two men created a mechanism to distribute Nutrilite vitamins. Within this

mechanism, in addition to making money in retail sales, distributors earned a bonus on the

sales.

In 1949, DeVos and Van Andel became distributors of vitamins for the Nutrilite Company of

California. They enjoyed modest success from their own retail sales and from bonuses

earned on the sales force they created in the Midwest.

Changes in the Environment - Increasing government regulations and an internal conflict in

Nutrilite led Van Andel, DeVos and several other leading Nutrilite distributors to start their

own venture.

Strategy Adopted - In April 1959 they created The American Way Association, later renamed

the Amway Distributors Association, to protect the independent distributors. They chose as

their first product a biodegradable liquid organic cleanser made by a small Michigan firm,

the kind of high-demand merchandise that could be easily sold by MLM. By September 1959

the Amway Sales Corporation and the Amway Services Corporation were begun to assist the

distributors.

Results - The company rapidly expanded. The first full year of operations in 1960 resulted in

gross sales of $500,000. That figure doubled in each of the next two years, and in 1964 it

reached $10 million. Thousands of distributors signed up each month. The expansion was so

rapid that as soon as the company moved into new facilities, they were already crowded.

http://companies.jrank.org/pages/227/Amway-Corporation.html

http://companies.jrank.org/pages/227/Amway-Corporation.html



AMWAY IN AUSTRALIA

Overseas expansion in the 1970s began with Australia in 1971, a choice that was partly

influenced by the common culture, language, and economic system. The number of

independent business owners has continually grown since Amway Australia’s beginning. The

number of Australian and New Zealander IBOs increased by 15% in 2009 [1] and by 2010

100,000 were registered as IBOs.

AMWAY IN EUROPE

From day one, Amway's primary business objective has been growth, and the European

market-place has been a key part of this goal. Operations in the United Kingdom began in

1973. Other European operations began with West Germany in 1975, France in 1977, and

the Netherlands and the Republic of Ireland in 1978.

AMWAY IN JAPAN

Japan was probably one of Amway's most successful foreign markets in the 1990s. In a

culture where many Japanese businesspeople were accustomed to staying with one

company for their entire career, Amway offered new economic freedom. In fact, word of

mouth recommendations allowed Amway to operate in Japan without spending any money

on advertising up until around 1989. In 1990, over 500,000 Japanese belonged to Amway,

making the company one of the largest and most profitable foreign companies in Japan.

AMWAY IN INDIA

Amway India, a wholly owned subsidiary of Amway Corporation, USA, was established in

1995 and has emerged as the largest direct selling FMCG company in India. Having

commenced its commercial operations in May 1998, Amway India has established a

nationwide presence with more than 125 offices and 55 warehouses. Over 450,000 active

distributors carry out business in every corner of the country, reaching as many as 2,000towns and cities.

http://en.wikipedia.org/wiki/Amway_Australia#cite_note-0

http://en.wikipedia.org/wiki/Amway_Australia#cite_note-0



AMWAY IN CHINA

The Issue

Amway entered China in April, 1995. Their entrance into the Chinese market has earned big

profits, with more potential to grow. But on April 21, 1998, Chinese officials issued an

immediate ban on direct marketing that threatened a multi-million-dollar market for

Amway and other potential direct marketing companies. Chinese government officials claim

the ban was absolutely necessary because the direct-selling operations functioned as a base

for criminal activity. Amway's direct-selling techniques scared Chinese officials for fears of

spreading heretical religion and the start of secret societies. The ban was lifted threemonths later on July 21 due to heavy lobbying from American businessmen and Chinese

government officials. But Amway was forced to revise their business plans to only sell

products in retail outlets, not through direct-selling. These new guidelines are very different

from Amway's selling technique, which is based on Amway's pyramid building and selling

system.

Analysis of the SLEPT factors in China

Economic : Fuelled by foreign direct investments, China’s economy is beginning to dominate

the Asian economic landscape. Indeed, China springs past tiger nations. It has had positive

GDP growth in the last five years, while other Asian economies have stalled. China’s

economy is growing at a rate of about 8 percent, the fastest in Asia. It means that this

country is certainly profitable. But Amway must ask itself if the market demand is important

and if it will be competitive.

Indeed, China is an emerging economy but a dual economy too, with a wealthy urban

professional and a poor country people. The gap between rich and poor has grown almostas fast as overall income, meaning that inequality is increasing nearly with the country’s

development. There are huge income discrepancies that are emerging within social groups

and between regions.

The Chinese market has attracted foreign investors because of its huge size and market

potential. Some predict that China will become in few years the world’s largest economy but

that could fall flat due to political circumstances.

Political : The Communist Party of China has transformed itself. It has declared that it

represented capitalists as much as workers and peasants. The Old China defended theworking class against the capital class. China has just begun its transition to become a



democratic country. China’s new leadership has come to power facing enormous economic,

environmental, political and social challenges at home. So, Amway faces the challenge to

interpret the very different cultural and political implications of their presence in a changing

communist country.

Social : The Chinese population = 1.2 billion of people. The past decade has seen aphenomenal rate of growth in China. It represents an important potential of customers for a

firm.

Cultural : The Chinese are seen as having a low level of involvement when purchases are for

private consumption but a high level of involvement when they are buying products for

their social or symbolic value. Since the Chinese greatly value social harmony and

smoothness of relationships within the extended family, the social significance of products

are highly important be it to express status, gratitude, approval or even disapproval.

The Chinese are sensitive to social risk and the loss of social status if a wrong buyingdecision is made. The level of brand loyalty found in a market is also closely related to the

perception of risk. There are huge variations in attitudes to brand loyalty across different

cultures.

In China, consumers are loyal, not really brand conscious and not really used to cross

product comparisons, except the urban consumers, who have a wide recognition of foreign

brand names. Indeed, there are sharp differences between rural and urban attitudes. On a

national level, Chinese consumers prefer to buy domestically manufactured products rather

than comparable foreign-made goods. But, consumers in big cities are less likely to favour

domestic products than are consumers nationally.

And, typical Chinese consumers do not want to be amongst the first to try a new product.

They are reluctant to be pioneers, especially for an expensive, unrecognised (in terms of

brand) foreign product. Concerning the cognitive style; the Chinese have a quite synthetic,

concrete and contextual orientation in their thought patterns. Thus culture not only impacts

on how we behave as consumers but on the whole decision-making process, advertisers,

and marketing managers need to examine how they can exploit such nuances in building

their global brands.

There is a cultural gap between the USA and China. Chinese cultural values are largely

formed and created from interpersonal relationships and social orientations. Chinese

nations tend to rely heavily on personal relationship (Guanxi) in business dealings.

A culture of Guanxi networking is already established. "Guanxi" means connections or

relationship. Guanxi is essential in the initial stages of entering the Chinese market. For

foreign investors who seek to do business in China, to understand the dynamics of Guanxi

can contribute to the success of business.

Finally, Amway produces standard products to meet consumer needs in Japan, Philippines,

Taiwan, Singapore but their product range may not be appropriate to China. Indeed, even if

Amway has considerable experience in the Far East, the Chinese market is not a mirror



image of these countries. Then, door-to-door selling and “party programmes” are not part

of the Chinese culture.

Legal : Government policies are barriers in international markets. In China, policies and

regulations are often applied inconsistently and can vary between regions. Both foreign

nationals and Chinese officials themselves lack a solid understanding of China’s policies. The

key policies which act as barriers to entry relate to foreign exchange control policies and

foreign investment policy. Concerning foreign exchange control policies, the state is

responsible for formulating and promulgating the principles, degrees and regulations for

foreign exchange control.

The acquisition of foreign exchange is a significant non-tariff barrier to doing business in

China. Concerning foreign investment policies, China encourages joint ventures. The barriers

to access China’s distribution system make this system unstable : wholesalers at both the

local and central levels, new collective and private enterprises and factories, as well as some

foreign companies compete to distribute consumer products. Local ministry of commercewholesalers traditionally served as intermediaries between the producer and retail outlets.

Foreign companies were not permitted to engage in wholesale trade. A strict isolationist

policy kept foreign goods and trends out of reach of the average Chinese person, because

Chinese consumers have less abundant information and purchasing experience with foreign

products, they may rely more heavily on information such as the producing country’s image

in product evaluation.

In China, direct-selling operations function as a base for criminal activity. Indeed, the market

is riddled with unscrupulous operators selling substandard goods with poor services,claiming to be legitimate direct marketers. So, Amway’s direct-selling techniques could scare

the Chinese government and all direct selling could be banned; it means that Amway China

affiliate could have to make changes in its distribution methods in order to work with

China’s regulations. Amway could have to revise its business plans to only sell products in

retail outlets.

Concerning the personal sales, customers could receive discounts by paying a small annual

fee, similar to buying a membership in a wholesale club. Goods could be sold by “sales

representatives”. They will theoretically operate from the retail establishments. But most

former distributors will probably continue to do business as usual, telling the retail centrethey are purchasing goods for themselves and then re-selling them to customers on the rare

occasions where there actually is an end consumer. In fact, there is a cultural gap between

an American company trying to use American sales tactics in a foreign country like China.

Technological : The internet and the access gained to the world wide web is revolutionising

international marketing practices. This explosion of international marketing activity and the

associated emergence of the global information highway will impact on all businesses



Analysis of the reasons for failure

1. Inability to find the right market niches

2.

Unwillingness to adapt and update products to local needs.3. A vacillating commitment - Amway had not considered the environmental

influences on international marketing that could represent barriers to their

entry in China.

4. Inability to manage local stakeholders. This includes an incompetence in

developing a satisfactory partnership relationship with unions and

governments : Amway had not developed a partnership/relationship with the

Chinese government

5. Inability to apply ideas developed in one country to other countries

worldwide: Amway tried to use American sales tactics in China, but cultural

gaps are too important.

Strategy adopted

After widespread lobbying from American businessmen and several Chinese government

officials, the government accepted Amway's revised business plan to sell products in retail

outlets instead of direct selling on July 21, 1998. (Refer to Fig. 6 in annexure)

The new plans include combining retail locations operated by the company with a strongteam of non-employee sales representatives to promote Amway's products and services. It

is essential for Amway to reiterate their independent sales technique that is the heart of

their business. The change is this: Customers now pay a nominal fee to become privileged

customers who are eligible to buy products at a discount. They must physically go to a retail

outlet where all Amway products have a retail price marked. Amway's existing product

distribution centers are located in 14 provinces. Amway invested $29 million to set up 100stand-alone stores - something it has nowhere else in the world. It started to runadvertisements which was another first.

Critical Evaluation of the strategy

The company began building close connections with government officials. At the same time,

Amway made highly visible changes to its sales operation. As a result, with government

approval, it racked up $700 million in sales in 2002, almost four times what they were

before the ban. China is the company's No. 4 market world-wide, with China profits funding

all its expansions here.



AMWAY’S INTERNATIONAL MARKETING STRATEGY

Amway's growth was predicated on the success of its independent distributors. Lacking

formal control over the distributors, Amway relied on bonuses and incentives to motivate

them. As the company grew, distributors built larger and larger sales organizations. Their

status and income increased and were marked by achievement levels identified as "pin

levels."

The corporation kept in touch with its distributors through a monthly magazine, the

Amagram, and provided a wide variety of sales literature, audiocassettes, and

videocassettes. Although much of the product promotion was done by distributors, Amway

also sponsored advertising in magazines, newspapers, radio, and TV. Its advertising costs

were much less than other corporations, allowing Amway to introduce new products

inexpensively.

Amway's success depended in part on its ability to adapt its product line to suit local

cultures. In Japan, for example, the company began marketing a small induction range made

by Japan's Sharp Company, which proved ideal for the small homes of Japan and sold well

when demonstrated in the home by Amway distributors. Perseverance and high quality

goods resulted in 1988 sales of $536 million for Amway (Japan) Ltd., Amway's largest

overseas subsidiary.

With the failure of communist economies in Eastern Europe and other nations, Amway's

promotion of free enterprise became increasingly noteworthy in the years ahead. During

the first half of the 1990s, Amway's territories expanded into Korea, Hungary, Brazil,

Portugal, Indonesia, Poland, Argentina, the Czech Republic, Turkey, and Slovakia. In addition

to tapping into new, emerging economies, foreign expansion was possibly part of Amway's

strategy to offset slowing U.S. sales, prompted, according to one article in an October 1994

U.S. News & World Report, by regulatory investigations and media criticism of the company.

In 1991, for example, Procter & Gamble won a $75,000 judgment from a group of Amway

distributors, who were accused of spreading rumors that Procter & Gamble's products were

instruments of Satan.

Japan was probably one of Amway's most successful foreign markets in the 1990s. In a

culture where many Japanese businesspeople were accustomed to staying with one

company for their entire career, Amway offered new economic freedom. In fact, word of

mouth recommendations allowed Amway to operate in Japan without spending any money

on advertising up until around 1989. In 1990, over 500,000 Japanese belonged to Amway,

making the company one of the largest and most profitable foreign companies in Japan.



Much of the company's success during the latter half of the decade depended on continued

growth in foreign markets, but continued growth did not arrive. The foray into China,

financed by the 1994 public offering of Amway Asia Pacific, ran into a pernicious obstacle in

1998, when the Chinese government banned direct selling because of concerns it would

spawn illegal activity. Eventually, Amway was able to sidestep the prohibition by sellingproducts through sales representatives that did not buy products and resell them, as

traditional Amway distributors did.

In September 1999, the company established a new company named Quixtar to sell

consumer products on the Internet. With Quixtar, Amway used the same marketing concept

as it did in its traditional business: distributors purchased products at volume discounts and

earned commissions on the sales and bonuses from the sales of new recruits. Apart from

Quixtar's business being conducted electronically, the greatest difference between Amway

and its new company was the conspicuous absence of the Amway name. Years of negativepublicity stemming from the numerous lawsuits filed by Proctor & Gamble had stained the

Amway name, observers contended, prompting Amway to distance itself from a

questionable reputation by adopting a new name. Additionally, by excluding the Amway

name from its Internet venture, the company hoped to attract younger customers and

younger distributors.

The company is in its third year of a strategic plan intended to drive innovation, talent and

growth. "Amway has hired 23 executive leaders in the past three years," said Van Andel,

"adding to a world-class senior management team that has grown with the Amway

business. The new leaders bring outside perspectives and insights to us, and the veterans

are giving them a strong, supportive base to build from."

Ansoff's product/market matrix is an accepted way of identifying and categorising market

and product developments and opportunities. Amway makes good use of the technique.



MARKET PENETRATION

Going for market penetration has involved Amway in making the most of current products

and competences by 'stretching' them to improve Amway's competitive position within

existing markets. One great benefit of direct selling is that it is an immediate channel to the

marketplace that offers customers a good service, while at the same time providing

business opportunities for individuals.

Special incentives enable IBOs and end consumers to take advantage of particular offers at

certain times of the year and these incentives have also helped to increase market

penetration. There are also special events such as Leadership Training Seminars. These

enable IBOs to spend time with others involved in the business and to learn about 'best

practice' from each other, whilst also sharing ideas.

PRODUCT DEVELOPMENT

Product development is a particularly appropriate strategy where an organisation is strong

in research and development. Product development is highly important for products that

have comparatively short life-cycles. Within Amway there are approximately 500 active

research and development projects in progress at any one time. With around 575 staff

involved in research processes, and with strong links to many universities, Amway

formulates, designs and develops new products to meet customer needs and expectations

within the global marketplace. Amway currently holds more than 380 patents

internationally and has approximately 430 patents pending. Within its product development

programme, Amway's technical teams use the company's customer base to monitor andtest new product ideas.



MARKET DEVELOPMENT

Market development involves taking existing products into completely new markets. One

method used by Amway involves expanding the ways in which individuals can be involved

with the Amway business. Amway has developed a structure known as the IMC model. This

increases the number of ways through which people can become involved in the Amway

business. Each of the letters IMC stands for a different type of involvement.

I - Independent Business Owners (IBOs)

M - Members

C - Clients (customers) of the IBOs.

Members are allowed to purchase Amway products at a price equivalent to that paid by

IBOs, but do not participate in the Amway Sales and Marketing Plan. They are a new type of 'customer' who deal directly with Amway.

DIVERSIFICATION

One way in which Amway have diversified its activities is through creating an on-line

business opportunity called 'AMIVO' to support and enhance its traditional business. This

makes use of the internet. The internet is a good example of a structure that no one firm

has had to pay to construct, but which is available to all firms now that it has been

constructed. The challenge to each business is to identify how to use the internet in waysthat are advantageous to it and also profitable.

Amway has succeeded in doing just that. The European platform of AMIVO was first

launched within the UK to provide a one-stop office for IBOs. IBOs can use AMIVO for:

a means for Amway to communicate with IBOs quickly

ordering products from their home 24 hours a day, 7 days a week

a communication tool to promote their business

keeping track of their business status

a reference resource

a medium to recognise IBO business achievement.



CRITICAL EVALUATION OF THE STRATEGY ADOPTED

Amway’s parent company, Alticor Inc., announced record sales of more than US$8.2 billion

for the year ended Dec. 31, 2008, a 15 percent increase over the $7.1 billion reported in2007. Two-thirds of the company’s 58 affiliates recorded sales increases in 2008, including

strong growth in the China, Russia and In Amway Global's parent company, Alticor, today

announced sales of $8.4 billion for 2009, a 2.3 percent increase over 2008 and another

record year for the company. The company has posted increases nine of the past 10 years.

In Amway's 50th year, Amway Global helped move the company forward by launching an

application for iPhone to connect Independent Business Owners (IBOs) with consumers,

continuing the successful Mobile Brand Experiences and spreading the word about the

company through advertising and sponsorships.

Amway is also one of the top 100 consumer brands in China (refer to fig. 3 in annexure).

Refer to Fig. 1 and 2 in annexure for detailed sales data.

KEY SUCCESS FACTORS

Loyal and Captive Consumer Base of Distributors: Distributors have a personal stake in“growing with the business”, so they are inclined to buy products themselves. They are

influenced to a great extent by the groups as well and are always encouraged to try the

product beforehand, to be able to sell it better.

Consumer-Distributor Word-of-Mouth Magic: Being a friend/relative of the consumer, the

distributor would be expected to share similar tastes and interests. Therefore, the

distributor’s recommendations would be trusted and acceptable. Many a times, it is just

tough to say “no” to an old aunt or good friend.

Products: Product quality has been acknowledged to be really good, and endorsements andtraining from specialists at the supplier’s training centers builds positive perception as well.

Products are extremely expensive, and high prices are justified on the basis of quality and

the concentrated form of the product, which implies lower cost per use.

More & More Subscription Revenues: The ever-growing urban middle class in countries like

India is the ideal pool for potential distributors, looking to make extra cash which denotes

“success” and “respect”. The margins seem extremely attractive in India, since some

research revealed that prices for many products are identical to those in the US. Thus on a

pure PPP basis, Indian distributors are much better off. Amway boasts of almost 3 lakh

active distributors today.

http://mediablog.amway.com/2010/03/09/another-record-year/

http://multivu.prnewswire.com/mnr/amway/42725/

http://multivu.prnewswire.com/mnr/amway/42725/

http://mediablog.amway.com/2010/03/09/another-record-year/



Aggressive Product Launch Strategy: Since a captive consumer base exists, trials and

repeats are guaranteed to an extent, so revenues are accelerated by launching a new

product almost every month.

Market-Specific Initiatives: Some of the other market-specific initiatives include –

INDIA: Mass advertising (which is not a usual practice in direct selling), smaller SKU’s (such

as sachets) and tie-ups with big names such as BPCL and Standard Chartered through petro-

card/credit card schemes to add credibility to the business.

These factors have contributed tremendously to the huge success that players like Amway

have enjoyed in India.

EUROPE: VistaPrint Limited, the small business marketing company announced a strategic

partnership with Amway Corp. As part of the agreement, Amway will offer VistaPrint’s high-

quality marketing materials that are specific to Amway brands to its independent European

sales representatives. These include business cards, postcards and promotional materials.

Amway Europe leverages its global reach by conducting cause related marketing activities.

Since 2005, Amway Europe has created collectible pins to support UNICEF. For every pin

sold in 26 Amway Europe territories, a donation of €1.40 is donated to UNICEF

immunization and education programmes in Africa and Eastern European countries. Amway

Europe also purchases customized retail UNICEF greeting cards for all of its business

operations worldwide.

In 2003, the company launched its Corporate Social Responsibility Programme, the ‘One by

One for Children Campaign,’ which now incorporates the UNICEF partnership.(refer to Fig. 7 in annexure)

Since 2001, Amway Europe and its 500,000 European Direct Sellers and 26 Affiliates havedonated more than US $3.5 million to facilitate UNICEF’s Immunization Plus efforts. In2005, Amway Europe re-committed to raise € 2.5 million to support UNICEF Immunizationand Education programmes over the next five years.

AUSTRALIA: Traditionally Amway marketing strategies tended to target parents who want

to work from home. In a shift away from this model Amway Australia signed swimmer Libby

Trickett and cricketer Adam Gilchrist in 2009 as Amway ambassadors in a push to lift itsstanding with Generation Y. This push saw 40% of new members in 2010 under the age of

30. (refer to Fig. 4 and 5 in annexure)

http://www.amway.com/en/GlobalComm/Campaign-for-Children-10114.aspx




http://en.wikipedia.org/wiki/Libby_Trickett


http://en.wikipedia.org/wiki/Adam_Gilchrist

http://en.wikipedia.org/wiki/Generation_Y

http://en.wikipedia.org/wiki/Generation_Y

http://en.wikipedia.org/wiki/Adam_Gilchrist







LEARNINGS FOR MARKETERS

Despite its evident strengths, some conventional marketers do not wish to enter network

marketing purely because it seems to involve mixing a bit of ‘false hope with good soap’. So

could there still be any takeaways? Seemingly there is a lot more to direct selling than meets

the eye and there is a wealth of consumer knowledge that can be derived from this model:

* Consumers demand sustained benefits in return for sustained loyalty: This point has

been made again and again in marketing theory. Distributors see points translating into cash

in each bottle of shampoo they purchase. This sustained benefit influences their decision

making to try as many products as possible under the mother brand. Some firms such as

Britannia did a good job of implementing this learning. The loyalty points program provided

consumers an excellent sustained benefit in each product they would purchase with the

Britannia brand name.

* Increased knowledge about product develops confidence and preference: Amway

educates distributors who pass on the information to other consumers about product

attributes and ingredients. This high level of awareness results in inclination to purchase,

especially for high involvement personal care products such as cosmetics.

* The power of word-of-mouth: When friends recommend a product, they do so without

any vested interest, and that increases the credibility. This action generates trials and

awareness and later becomes a great channel for consumer feedback on the product.

Though most of these aspects seem obvious and easy to reapply, yet it is necessary to point

out that the ultimate driving force remains hard cash. And that is a tough motivation to

substitute.



ANNEXURE

FIGURE 1

FIGURE 2



FIGURE 3



FIGURE 4

FIGURE 5



FIGURE 6

FIGURE 7



REFERENCES

Chen, Robert, Wang & Cheng, 1998; “The Success Factors for Direct Selling Business”, 1998

Asia Pacific Decision Sciences Institute Conference, Proceedings p.p. 17-23.

Reichheld, F. F., 1996, Ed.; “Quest for Loyalty: Creating Value through Partnership”; Harvard

Business School Press: Cambridge, MA.

Wotruba, Thomas R., 1990; “Full-Time vs. Part-Time Salespeople: A Comparison on Job

Satisfaction, Performance, and Turnover in Direct Selling", Intern. J. of Research in

Marketing 7, 97-108.

http://companies.jrank.org

http://www.thetruthaboutamway.com

The Times 100

wikipedia.org

http://www.thetruthaboutamway.com/



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